My husband and I are NY residents. If I were to take a job in Florida and he remains in our home in NY and works in NY, I understand we could file separate state returns.
Everyone tells me this would be great because we would save on the state taxes from my Florida income.However, will it be a benefit? Will he have to report my income on his return or will he only need to report his share of income and pay tax on that only?
Thank you
In general, yes: If you file separate returns, he will only report his income, and as long as you are not a New York resident, and you have no New York income, only his income will be subject to New York state tax. I don’t know that much about New York taxes, but it may well be the case that rate brackets and exemptions change if you are a married person filing a separate return – that’s how it works for federal income tax – so the savings may be less than you think. Plus, if you have New York state income – from your job there before you leave, or maybe from real estate you own jointly with your husband, things like that – you will have to file a New York non-resident return (separately from your husband) and pay New York taxes on that. But there should be substantial savings if you are no longer a New York resident and the bulk of your income is outside New York, certainly enough to justify the additional cost and headache of filing separate state returns.
new york law is trick wrt residency, and the instructions online are circular (purposely?). Suggest you check with a NYS tax guy/gal.
So you plan to permanently move to Florida and never move back to New York?
I am far from a tax guru, however I know several couples transitioning to FL. NY and NJ have a rep for trying to claim residents to the point where those moving south keep detailed calendars to prove how many days they spent in each location, and kept a file with all plane tickets, rental car receipts etc in case of audit.
A lot of wealthy people move from Ohio, which has very high taxes, to Florida. You must live in Florida for six months and a day each year, and you will need to be prepared to show that you were actually there if you are audited, through credit card receipts, plane tickets, ect. You can save a fortune. My guess is that the New York rule is similar.
Same here in Illinois, so I suspect that it’s just about anyone from any other state trying to show proof of Florida residency for tax purposes.
@madison85, the horizon is blurry. I don’t plan to move to Florida permanently. We will keep our house here in NY as husband will be working in NY. We don’t know if eventually he will move to Florida but that would be years away 3-5, maybe or I will return or we will move somewhere completely different all together (Carolinas, Calfiornia).
My current concern is that if I pursue and obtain this job in Florida, will I end up owing NY state taxes because my husband and our home is in New York. Given that Florida has no state taxes, that would mean I need to set aside funds for that and that would take away the attractiveness of working there as the NY state taxes would eat away at my income. Thus, I would have to figure out what the walk away salary would be. I am not a hot weather fan, so I would not be moving there for that. I would rent in Florida and probably come home for holidays and long weekends. If I do get this job, I would probably move August or September and given the 6 month and one day rule, I already see losing any residential benefit this year.
Certainly sounds like you are maintaining NY residency to me. You’ll vote in NY, send your kids to NY schools, register your car in NY, own a home in NY?
No. I will only own the home in NY. I probably will need to register a car in Florida. My kids are grown.
I think you need to talk to an accountant. There is a provision in the New York law about have living quarters “maintained” for you in New York that may be relevant to your situation.
Any NY volunteer work, club memberships, boards?
Link to 128 pages of audit guidelines for NY nonresidency.
good thank you! Our accountant is on a post tax vacation. I will reach out eventually but want to get an idea now.
https://www.tax.ny.gov/pubs_and_bulls/tg_bulletins/pit/permanent_place_of_abode.htm
https://www.tax.ny.gov/pit/file/do_i_need_to_file.htm
@lia_b, are you going to file your federal income taxes married but separately? Or are you going to file a joint return with your husband?
I expect we can still file married jointly. Something interesting that I just caught in the link provided by Madison85 has to do with the treatment of the gain after sale of a home. It gets more complicated : (
“For example, a husband and wife purchased a home in New York for $150,000 in 1965 and established New York as their domicile. In 1985 the taxpayers purchased a home in Florida and changed their domicile. Although they now consider themselves nonresidents of New York, they retained the New York residence until 2004 when it was sold for $600,000. According to IRC Section 121, taxpayers can exclude the gain on the sale of a principal residence occurring on or after May 7, 1997 not exceeding $250,000 ($500,000 if married filing jointly). Since the taxpayers in the example indicated that they changed their domicile in 1985, the New York property ceased being their principal residence long before it was sold in 2004. The taxpayers would owe tax for federal and New York State purposes on the full $450,000 gain in the year of the sale”
My dad worked in NY and we lived in NJ. He had to pay NY State & NY City taxes, but those were credited on his NJ income tax liability. It may be the same if your residency is in NY but your income is in FL.
I finally got to speak to my accountant so I thought I would share in case any else has a similar situation. NY always wants their taxes so I would need to withhold to cover my NYS taxes.
With regards to the home sale exclusion. One has use the home two out of the past five years. It does not matter the order but it has to be two years. If one spouse does not use the home two out of the past five years, then the exclusion is calculated separately as if they were not married. I translate that to mean that one spouse will not get the exclusion and the 500K is reduced to 250K. Something to think about.
I attach the link below.
http://www.nolo.com/legal-encyclopedia/the-250000500000-home-sale-tax-exclusion.html
Yes, chedva, that is how it works here too. OP’s issue is that Florida has no state income tax, so she will have to just pay NY taxes on all of it herself unless she tries to claim FL residency.
If OP becomes a Florida resident and saves a bundle in taxes, would it still be advantageous to file a joint tax return? Is this one of the times that ‘married filing separately’ would be better financially? Are there that many credits or benefits to filing jointly in this couple’s situation?